Zotec to Acquire MMP for $200 Million
Zotec Partners LLC has signed a definitive agreement to acquire 100% of the stock of Medical Management Professionals, Inc. (MMP), a subsidiary of the publicly traded CBIZ, Inc., for around $200 million. Zotec, an Indianapolis-based medical billing and practice management company serving the hospital-based specialty market had been a long-time “respectful competitor” of MMP, said T. Scott Law, CEO and founder of Zotec, in an interview with ImagingBiz. MMP offers medical billing and practice management services to hospital-based physicians in the areas of radiology, anesthesiology, pathology and emergency medicine. The last area — emergency medicine — will be a new market for Zotec. For the time being, MMP will operate as a subsidiary of Zotec and retain its name and branding, Law said. He expects that there will be synergies and efficiencies in operating the two companies together, but determining these is a process they are really just starting now that the agreement is signed. “This is a very private and very confidential deal, so we really couldn’t get into all the benefits until we get the purchase agreement signed,” he explained in the phone interview. “We are really not sure exactly what synergies will be and what opportunities are there, but we knew it would be a good way for us to increase our presence in the radiology and anesthesia spaces, and then expand into the emergency department space.” The transaction is subject to customary closing conditions and regulatory approvals, with an anticipated close on or before September 1, 2013. Law said that the combined company will serve 574 clients representing 8,000 physicians with a total volume of 60 million medical procedures a year. The vast majority of the physicians are in radiology. With regulatory approvals pending, Law could not say what specifically had prompted the purchase of MMP now. However, like most businesses owners with an admirable competitor, an acquisition had been on his mind for some time. “I like to say that I’d been working on this since 2006,” he said. “Offline” discussions with MMP and CBIZ management had been taking place over several years, he added, and these got more serious in January of this year. “We have a technology platform that we believe is strong. MMP has a client services offering model and a way that they service their clients that we believe is strong. Together we will have the best service and the best back-end processing and technology that I think will form quite a good company for our clients,” he said. Although Law was unable to comment at this time on whether there would be specific advantages in taking MMP private, he did note that one advantage of MMP being purchased was that Zotec is a private company focused only on the billing and practice management business and therefore might be able to give MMP more attention than a larger public company could devote to it. “This is our only business and we don’t have any distractions or capital acquisition questions or things like that,” he said. Moving forward, Zotec will look to expand the three specialties it is currently in. “We think there is a lot of room left to go to service those three specialties,” Law said. “We’ve also seen a lot of hospitals buying up physician practices and then realizing that they need management services and back-end billing services to actually make them successful. We think that is a good market for us as well.” All in all, he is bullish on the future. “Both of our companies believe strongly that health care reform is going to be a positive thing for our particular industry, in the form of additional insured compared to the self-pay money that is in the business,” he said. The other factor is baby boomer reaching the 50 to 60 age span when imaging becomes more necessary for screening exams and test. “As they get older and older, this will just be more of a bolus of volume coming through over the next several years,” Law said. Darrell Hulsey, President of MMP, stated in the press release, “Zotec and MMP have a similar focus – to ensure client success is our first and foremost priority. The partnership of Zotec and MMP will create a stronger company overall with increasingly diversified services.” William Blair & Company provided M&A advisory and debt capital placement services to Zotec in connection with the transaction. Falcon Capital Partners, LLC advised CBIZ, Inc. on the transaction.